Prime Minister Shehbaz Sharif has announced a substantial reduction in the petroleum levy, bringing the price of petrol down to Rs378 per litre from a projected high of Rs458. This decision, shared during a televised address to the nation, serves as a critical intervention following an unprecedented surge in fuel costs driven by international market volatility. The Prime Minister confirmed that the new pricing would take effect immediately at midnight on Saturday and remain locked for at least one month, providing much-needed predictability for consumers and businesses alike during a period of extreme economic pressure.
The move comes as a direct response to the government’s earlier announcement of a 43 percent increase in petrol prices and a 55 percent hike for high-speed diesel. To mitigate the ripple effect on transportation and freight costs, the administration strategically adjusted levy rates across different fuel types. While the levy on petrol was set at Rs160 per litre to accommodate the reduction, the levy on diesel—which currently stands at Rs520.35—was slashed to zero. The Premier emphasized that these measures are part of a broader effort by federal and provincial authorities to shield the public from the harshest impacts of the current global fuel crunch.
This domestic energy crisis is largely a byproduct of the geopolitical instability in the Middle East, specifically the conflict involving the US, Israel, and Iran that commenced on February 28. Since the outbreak of the war, Pakistan has faced several recommendations for massive price hikes, which the Prime Minister noted he had repeatedly rejected throughout March to protect the common man. However, the sustained pressure of skyrocketing international oil prices eventually necessitated a price adjustment. To date, the government has utilized approximately Rs129 billion from national resources to cushion citizens against these global price shocks over the last three weeks.
In tandem with the fuel relief, the Prime Minister announced intensified austerity measures within the government. Reflecting a commitment to shared sacrifice, federal cabinet members will now forgo their salaries for a total of six months, an extension from the previously decided two-month period. Although the Prime Minister admitted this specific decision was made in haste to address the urgency of the situation, it underscores the administration’s “national austerity and savings” philosophy. The premier also highlighted the diplomatic efforts being led by himself, Deputy PM Ishaq Dar, and Chief of Army Staff Field Marshal Asim Munir to advocate for de-escalation in the Middle East.
The relief package and the targeted subsidy initiatives are designed to have a nationwide reach, extending to Azad Jammu and Kashmir and Gilgit-Baltistan. By consulting with provincial leadership and relevant stakeholders, the federal government aims to ensure that the “national resources, which are limited,” are used effectively to support the most vulnerable segments of society, including farmers and low-income workers. As the global landscape remains uncertain, the government maintains that its priority is to provide targeted relief while managing the fiscal challenges posed by the ongoing regional conflict.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.